I love how fiction warps the mind. Today’s example…
I think I only dream in present tense, though time is surreal in dreams. When recounting a dream, I think I do so in past tense, though with the occasional foray into present tense. Surely some dreams are exciting enough to relay in real time. The dream experience happened, though the events never quite did, and past tense usually fits. Though that seems more like a storytelling convention rather than treating dreams or dream experiences like the actual past.
So when a character recounts a dream to another character, would they do so in past tense? Even in a story written in past tense? Or would that be past perfect? Or depend on the frame in which the dream was introduced? Would they slip into the present tense for dramatic effect? Would a narrator recount a character’s dream in past tense? Depends on if it’s in scene or summary. And the tense of the story. And how much weight you’d give to things that never happened (in the context of fiction itself, which only ever emotionally happened).
And if you really want to dive into the rabbit hole, consider a story set in the future, told in the past tense, with an ending that begs the question how it could be relayed in anything but the present? In retrospect—ha—this is a strong reason to use the first person point of view; it’s a way of staying grounded to a particular character when time and reality are uncertain.